I want to upgrade from 150 to 200 Amp service. My current panel has double breakers in ever slot except where the A/C, Dryer and Range are connected. I have wired panels before but never upgraded the service. I have studied and planned the change over the last two months but I still have a question on the grounding. Currently my panel is a main breaker panel and it is grounded to the water pipe (No Grounding electrodes). My service comes in approximately 70 feet from where my panel is located. I am replacing the meter box with one that has the meter on one side and the 200 main on the other. I am running 4 awg 4/0 cable from the new meter/switch panel to the new breaker panel. My county requires NEC2005 codes, where and how do I ground this system to code? Does all of the grounding take place from the new meter/switch panel or am I required to also ground the main lug panel? Does it matter which hot runs to which bus bar? Or whether I locate the neutrals on the left and the grounds on the right?

Your grounding electrode conductors AND water bond/electrode conductors all go to the main disconnect.
You will need a #4cu to the water pipe and connect within 5' of where the pipe enters. You must also jump around any meters or plastic fittings such as filters.
You also need at least one ground rod to supplement the water pipe electrode. The wire to this can be a #6cu and should go from the disconnect right to the ground rod(s). Some areas accept one ground rod, some require the 25 ohm test and will simply require a second rod installed. You are NOT required to install any more than two rods.

You DO NOT have to run four 4/0AL wires to the panel. You can reduce the neutral to a 2/0AL and ground does not need to be any bigger than #6cu or #4al.
You can use anything larger if you desire, but the sizes mentioned are code.
There's NO way I'd personally run FOUR 4/0al if I didn't have to.